TMI Blog2023 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... credible Unique Buildcon [ 2022 (7) TMI 1182 - CESTAT NEW DELHI ] held that the invocation of the extended period of limitation would not be justified. It is, therefore, not possible to sustain the invocation of the extended period of limitation from June 2007 upto September 2010 resorted to in the first show cause notice dated 23.10.2012 issued for the period January 2007 to March 2012. The appellant was clearing the pre-fabricated/pre-engineered steel buildings/structures and the parts thereof from its plants on payment of the excise duty as applicable and under the cover of the statutory prescribed invoices. This duty paid goods were cleared to the designated sites where erection, installation and commissioning were to be undertaken - the appellant has to pay service tax on the value of services as per rule 2A of the 2006 Rules and thereafter avail the CENVAT credit - On calculation of the demand under rule 2A of the 2006 Rules, the appellant would be entitled to refund of Rs. 28.72 crores which, the learned senior counsel for the appellant has stated, the appellant would not claim as refund. However, demand beyond extended period of limitation set aside. - Refund of the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 27.10.2014 for the period July 2012 to December 2013 and a Statement of Demand dated 23.10.2015 for the period January 2014 to March 2014. 6. The Commissioner, by order dated 31.03.2017, confirmed the demands raised in all the three show cause notices and the Statement of Demand holding that the services rendered by the appellant would be classifiable under works contract service and rejected the availability of CENVAT credit and directed for its recovery. 7. The Tribunal, by decision dated 09.11.2017, allowed the appeal observing that the Composition Scheme was optional and the provisions of rule 2A of the 2006 Rules were subject to the provisions of section 67 of the Finance Act. The Tribunal, therefore, held that there was no question of applicability of rule 2A, nor could the Composition Scheme be forcibly applied. 8. The Supreme Court, by the judgment rendered on May 2023, while allowing the Appeal filed by the department filed against the aforesaid order of the Tribunal, observed as follows: 8. The short question which is posed for consideration before this Court is as to whether an assessee who is liable to pay service tax under works contract service has the legal right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In view of the above and for the reason stated above, the present appeal succeeds. The impugned judgment and order passed by the CESTAT is hereby quashed and set aside and it is held that the assessee is not entitled to take the total contract value which includes both goods and services and remit service tax on the value as works contract service and, in the process, also entitled to avail the CENVAT Credit on the entire amount. It is observed and held that the assessee has to pay the service tax on the value of services as per Rule 2A of the (Determination of Value) Rules, 2006 and thereafter to avail the CENVAT Credit accordingly. However, it is also observed and held that demand for the period January 2007 to May 2007 is unsustainable. 10.1 In that view of the matter now the service tax needs to be computed in terms of Rule 2A of the (Determination of Value) Rules, 2006 and as the assessee has not opted for the composition scheme, the matter is remitted back to the CESTAT for recomputation of the demands in terms of Rule 2A. As observed hereinabove the Tribunal has also not decided the issue of extended period of limitation. Therefore, while quashing and setting aside the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch 2012, the extended period of limitation could not have been invoked for the period prior to October 2010. 10. Shri Santosh Kumar learned authorised representative appearing for the department supported the impugned order, both on merits as well as on limitation. 11. The submissions advanced by the learned senior counsel for the appellant and the learned authorized representative appearing for the department have been considered. 12. The Supreme Court has remitted the matter to the Tribunal to examine two issues, namely the issue of limitation and recomputation of the demands in terms of rule 2A of the 2006 Rules. These two issues are being dealt with. Limitation 13. Section 73(1) of the Finance Act with the proviso, as stood at the relevant time prior to 01.07.2012, is reproduced below: 73.(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, confined his submission to the first show cause notice dated 23.10.2012 covering the demand for the period June 2007 to March 2012. The normal period for issuing the notice at the relevant time was one year. The notice that was issued invoked the extended period of limitation contemplated under the proviso to section 73(1) of the Finance Act. 18. The allegations made in the show cause notice for invoking the extended period of limitation are as follows: 43. In view of foregoing, it appears that M/s IBPPL had wrongly classified their service in the category of Commercial or industrial construction service in lieu of work contract service despite such lucid and explicit provisions. Even after issuance of numbers of the wrong circulars and clarifications M/s IBPPL resorted classification deliberately, with intent to evade payment of service tax in cash and to avail the inadmissible Cenvat credit of goods used in transfer of property to recover it in form of cash. T he short payment of service tax, availment of the inadmissible Cenvat credit of goods used in transfer of property and collection of amount in excess of the service tax assessed or determined and paid as representing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been conducted of the records of the company and no objection was taken in regard to non availability of credit, it cannot be said that there is any suppression of facts with intention to evade payment of tax. xxxxxxxxxxxxx 5.2 Appellants have been filing their half-yearly returns showing, CENVAT credit availed on inputs/input services. There is thus a clear disclosure in the returns filed. In respect of such disclosure made in the returns filed, there cannot be any allegation of suppression of facts with intention to evade tax. xxxxxxxxxxxxx 5.3 It is further submitted that the department itself was aware that from 01.06.2007 works contract service was introduced in the statute book. Therefore, the department should have automatically checked up whether our company was paying service tax correctly under the erst-while category namely Commercial or Industrial construction service and should have advised the company to shift to Works contract service. But the department did not do anything nor the department issued any show cause notice within the normal period of limitation that is with in one year of the date of the introduction of works contract service in the statute book. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion against them . (C). The fact is that the present dispute has arisen on the basis of the enquiry undertaken by the department. Hence it is clear that the said wrong availment would have gone unnoticed but the enquiry and consequently there would have been a huge loss of revenue to the Department. It is observed that the assessee has claimed the filing of ST3 return visit of the audit team on a regular basis to justify that there was no suppression of facts on their part as the availment of credit was known to the dept. In this connection it is a fact that the nature eligibility of the service was known only to the assessee. The assessee has not produced any evidence to the effect that the nature of service its eligibility was well within the knowledge of the department. The assessee being a reputed organization with fully equipped staff well versed with the excise formalities would have known that the CENVAT credit so availed was ineligible, but made a deliberate attempt to conceal the fact of the ineligibility of the CENVAT credit from the department with the intent to avail the ineligible credit. (emphasis supplied) 21. The contention of the learned senior counsel for the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o comprehensive audits and, therefore, it cannot be alleged that there was suppression of facts. To support this contention learned senior counsel placed reliance upon the decision of the Tribunal in Incredible Unique Buildcon Pvt. Ltd. vs. CCE ST, Alwar [2022 (65) G.S.T.L. 377 (Tri.-Del.)] . It is for these reasons that the learned senior counsel for the appellant submitted that the demand for the period from June 2007 to September 2010 is barred by limitation. 22. Learned authorised representative appearing for the department, however, submitted that in the facts and circumstances of the case the Commissioner was justified in holding that the extended period of limitation was correctly invoked. Elaborating this submission, learned authorised representative submitted that the appellant wrongly classified the service under the category of commercial or industrial construction service whereas the service actually rendered by the appellant was works contract service. The Supreme Court also, while remanding the matter, observed that the services rendered by the appellant w.e.f. 01.06.2007 would fall under works contract service. Thus, according to the learned authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be justified and the relevant portion of the decision of the Tribunal is reproduced below: 15. It is undisputed that the appellant had been rendering the services and has been paying service tax under the head CICS although its service involved for provision of service and use of goods. Revenue does not dispute its classification under the head CICS under Section 65(105)(zzq) for the period prior to 1-6-2007. After 1-6-2007, WCS was introduced by virtue of Section 65(105)(zzzza) of the Act, the appellant continued to classify its services under CICS, which according to the Revenue was not correct. We find that as per the ratio of Larsen Toubro Composite Work Contracts involving supply of goods or deemed supply of goods along with rendering of services are only chargeable to service tax under the head of WCS from 1-6-2007. They were not exigible to service tax prior to this date. Therefore, on merits we find in favour of the Revenue that for the period October, 2010 to June, 2012 the appellant s services were chargeable to service tax under WCS. xxxxxxxxxx 17. We are unable to find any proof of intent to evade either from the show cause notice or from the impugned order. Mere omiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether input service credit could have been availed without exercising the options provided in Rule 2A of the Service Tax (Determination of Values) Rules, 2006 or whether CENVAT credit can be claimed after discharging the liability in full, that having paid the service tax in full, Revenue is not incurring any loss of revenue, hence the Court should not undertake an academic exercise. 3.2 In the matter the issue that was examined by the Hon ble Court was that, whether input service credit could have been availed without exercising the options provided in Rule 2A of the Service Tax (Determination of Values) Rules, 2006 after having discharged the tex liability in full. It was held by the Hon ble Court that having paid the service tax in full, Revenue has not incurred any loss of revenue hence court should not undertake an academic exercise. 30. The aforesaid Circular also supports the view of the appellant that it was under a bona fide belief that it was entitled to pay the service tax at the full applicable rate on the gross taxable value in respect of the taxable service provided by it and avail the CENVAT credit on input as well. The Supreme Court, by judgment dated 02.05.2023 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract. Explanation. - For the purposes of this clause,- (a) gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract; xxxxxxxxxxx (c) Where value added tax has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax, shall be taken as the value of transfer of property in goods involved in the execution of the said works contract for determining the value of works contract service under this clause. xxxxxxxxxxx Explanation 1. - For the purposes of this rule,- xxxxxxxxxx Explanation 2. - For the removal of doubts, it is clarified that duty of excise paid on any goods, property which is transferred (whether as goods or in some other form) in the execution of works contract, shall not be availed as CENVAT credit. . 33. From a perusal of rule 2A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed credit on inputs is availed from 01.10.2010 to 31.03.2012 and then upto June 2012 (i.e. 2nd show cause notice) only. (D) Service Tax paid in cash by the appellant Yes, considered for entire period. 38. Learned senior counsel for the appellant has, in a situation where the demand for the period from June 2007 to September 2010 is found to be time barred, submitted the appellant would be entitled to refund of Rs. 28.72 crores if the taxable value of the works contracts executed by the appellant for the period from 01.06.2007 to 31.03.2014 is calculated in terms of rule 2A of the 2006 Rules. The summary of the details provided in the written submissions are as follows: Summary for all 4 show cause notice S. Tax under 2A payable (for all SCN) Less Tax paid in cash Less Cenvat credit on services Less cenvat on inputs Net payable under rule 2A 10,67,98,904 6,36,84,872 15,45,15,538 17,58,13,694 28,72,15,200 39. This factual position was stated by the appellant in the written submissions, a copy of which was served upon the department, but it has not been controverted. By way of abundant caution, the appellant was required to submit a duly certified statement of a Chartered Accountant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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